RENTON, Wash. — Boeing and the federal government are confronting a huge question: Should the company accept a bailout?
The billions of federal dollars could protect jobs, but some Boeing critics think the company should be held accountable for past actions that now put it in a dire financial position.
“Boeing was one of those situations where we knew we had a problem,” said Maureen Tkacik, a senior fellow at the American Economic Liberties Project, a non-profit that fights against concentrated corporate power.
They're watching Boeing closely.
“It's much more interested in making money than it is in making airplanes,” Tkacik said.
She said the problem is that instead of saving for a rainy day and investing in innovative new aircraft, Boeing has been spending billions of dollars on buying back shares of its stock, a process that makes the company more attractive on Wall Street.
That left Boeing with less of a cushion for unexpected tough times — like what's happening right now.
“If you kept that cash inside the company, maybe there was no need to do any bailout today,” said Amiyatosh Purnanandam, a finance professor at the University of Michigan. Purnanandam studies bailouts and has written about Boeing.
“The point is that you always try to be ready, that, should there be an economic shock, let’s keep enough cash to weather that storm,” Purnanandam said.
He and Tkacik said they are not opposed to Boeing seeking a federal bailout, but if it does, there should be conditions like limits on executive pay, promises to keep workers employed, leadership changes, or the government getting a stake in the company.
“If you live by capitalism in good times, and want government assistance in bad times, absolutely there's a problem, a big problem,” Purnanandam said.
“We need to start really expecting more and demanding more of our private sector,” Tkacik said.
Boeing CEO Dave Calhoun said in a March interview on Fox Business that if the government attaches too many conditions to its bailout money, Boeing would look elsewhere, like private sources.
“If they just force it we just look at all the other options and we’ve got plenty of them,” he said.
Washington's Congressional delegation, concerned by those comments, then sent a letter to Boeing, urging it to accept federal bailout money to safeguard thousands of jobs.
“We are disappointed to read reports that you are now considering forgoing the relief Boeing requested,” the lawmakers wrote.
In a statement to shareholders on Tuesday, Calhoun said the company continues to explore funding options, including the CARES Act, which President Trump signed into law at the end of March. The money is meant to protect American businesses and workers from the economic impacts of coronavirus.
Calhoun said the money “will be critical to supporting the entire aerospace manufacturing sector.”
The company could go after a mix of private and federal assistance. Calhoun has said his priority would be to pay back everything Boeing borrows.
In the meantime, he and the company’s chairman Lawrence Kellner are forgoing their salaries. Boeing has suspended its dividend, and there's a pause on those stock buybacks.